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What is rack inversion ?

Rack inversion is a term used when radical rising of oil and gas price occurs. As a result, gas stations owners also increase oil and gas with extremely high prices. Rack inversion is used by independent operators since they are being charged higher too, resulting in a chain reaction and forcing them to pass the high price to the consumers.

Independent operators buy spot gasoline, which is sold from refineries to dealers and fuel companies. Then, spot gasoline is blended and sold on to other operators. Usually, the first buyer of spot gasoline are branded operators and the left over is bought buy independent operators.

Numerous factors can cause rack inversion. First is shortage due to natural calamity to a conscientious effort to reduce surplus production of gas on the refineries’ part. Then, the rising of crude oil price, which causes the rack prices to fluctuate outrageously. The rack price change happens not just day-to-day but even numerous times on a single day.

Typically, independent operators add convenient stores and other amenities to supplement their income. Often, independent operators reduce their gasoline prices just to draw customers and hopes that they will purchase something else on the convenient store.

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